Mayur Uniquoters Q4 Results Review - Re-Rating Potential If Meets Robust Guidance: ICICI Securities

Systematix Research Report

Mayur Uniquoters Ltd. inline profit after tax (up 38% YoY) in 4Q was driven by strong revenue (up 14% YoY at Rs 2.2 billion, led by auto and exports) and soft Ebitda margin (18.7%, down 114 basis points QoQ versus 20% estimate). Strong cash flow generation continued (FY23/24 CFO: Rs 1.21 billion/1.13 billion). For FY25, management has reiterated its strong growth guidance of 15-20% (export 20-25%, domestic 15-20%).

OEM exports has potential to grow its revenue to 2.5 times in three years by adding new models every quarter. Footwear segment will take two years to revive due to large inventory liquidation, post BIS implementation, is under process. Overall margins will improve with greater mix of exports.

The current ~75% capacity utilization provides ample room for healthy growth over two-three years. Mayur Uniquoters has announced to invest Rs 300 million in its U.S subsidiary to buy land in Mexico to set up a warehouse. It can also consider setting up a manufacturing facility in Mexico in future to boost business.

A similar set up is also under planning for Europe to expand business there. Slow ramp up in the PU (FY24 revenue Rs 250 million, Rs 1.25 billion potential) plant is a concern though, impacted by continued illegal imports in India despite 'Add' imposition.

After a decent 4Q, we maintain our earnings estimates. After a muted 6%/6% compounded annual growth rate in revenue/profit after tax over FY19-24, we now expect a healthy 16%/20% compounded annual growth rate over FY24-26E with 21%+ Ebitda margin and ~22% return on capital employed in FY26E.

Our estimates are based on management guidance of healthy recovery in FY25 and a strong bounce in FY26 (driven by exports).

Maintain 'Buy' with a higher target price of Rs 720 (18 times FY26E price/earning, earlier Rs 619 at 16 times). We see large potential for more re-rating if Mayur Uniquoters meets its guidance.

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